Royalox International Inc. owner pleads guilty to bank fraud

The owner of a Phillipsburg-based luggage company pleaded guilty Thursday to defrauding a bank of $3 million by fabricating customers and inflating the company's sales, according to a news release from U.S. Attorney Paul J. Fishman.

Richard Rekuc, of Asbury, pleaded guilty Thursday in federal court in Newark to one count of bank fraud for stealing $3 million from Lakeland Bank in Oak Ridge, N.J. The 59-year-old faces a maximum sentence of 30 years in prison and a $1 million fine when he’s sentenced May 6.

Rekuc arranged a line of credit for his company, Royalox International Inc., to cover materials and other business expenses. An investigation showed that between 2004 and December 2009, Rekuc submitted false invoices based on fictitious bank accounts and phony clients, according to court records.

Authorities said Rekuc opened fake bank accounts with his own money under names of clients that were very similar to those of existing Royalox clients. He then created fake invoices billed to the phony companies and made payments back to his company from the fabricated bank accounts.

In August 2007, Rekuc created an account for Eagle Creek Sports and three months later showed more than $63,000 in sales to the fake company, according to court records. All this allowed Rekuc to show Lakeland Bank that the company was bringing in far more business that it was actually doing, according to authorities.

“The higher Royalox’s sales, the more money it could borrow from the line of credit,” according to the news release from Fishman.

Rekuc kept the money, but the news release does not indicate what he did with it.